Ken Hare In Depth: Alabama Medicaid program's "tipping point"

MONTGOMERY, AL (WSFA) -

Alabama's Medicaid program, which funds services for two of every three residents of nursing homes in the state as well as many other health care programs, is at a "tipping point" and if a referendum doesn't pass next month to shore up funding, Alabama's top health official fears the program could collapse.

Dr. Donald Williamson, state health officer, said Thursday that without the revenues that the referendum would provide, the state could see itself pulled into court by the federal government because of a failure to provide minimum services required by law.

And, he said, it's not out of the question that the state's Medicaid program could be closed down by the federal government.

Even if the state avoids that worst-case scenario, the amendment's failure could lead to the closing of hospitals serving smaller communities as well as many nursing homes. And once rural hospitals close, they likely will never reopen, even if the funding situation improves in future years.

"I'm about as despondent about where we are as I've ever been," said Williamson, who in addition to overseeing the state Department of Public Health has been asked to lead the effort to find solutions to the Medicaid crisis.

Without the referendum's approval, the Medicaid program would lose $100 million a year in state funding. And because state funds are used to match federal dollars, the impact on funding would be several times that amount.

Anyone who held out even a tentative hope that a recovering economy would rescue Alabama's ailing General Fund budget, making it unnecessary to pass the Sept. 18 referendum, can forget it.

A new report from the National Conference of State Legislatures indicates that most states are seeing at least a modest rebound in state revenues, with 29 states reporting fiscal year-end balances of 5 percent or more of General Fund spending. Only Alabama and Connecticut report zero year-end balances are likely.

And the NCSL's mid-year budget report suggests that Alabama's General Fund budget will not recover from the Great Recession and the loss of one-time revenues for several years.

To bridge that gap, the voters of Alabama can choose to approve a referendum on Sept. 18 that would allow the state to divert

$147 million a year for three years to the state's General Fund from the $2.5 billion Alabama Trust Fund.

The Alabama Trust Fund, which comes from revenues from state oil and gas royalties, has been referred to as the state's savings account.

To put the proposal into perspective, the amount diverted if the referendum is approved would amount to about 17 percent of the trust fund.

For the state in essence to take a large chunk of its savings to help meet expenses is a serious matter, one that voters should take seriously.

But the alternative if the referendum does not pass goes beyond just being serious. The consequences could be nothing less than catastrophic for the Alabama Medicaid program, and it could drastically curtail a wide range of state services, from mental health to prisons, according to Williamson.

Without the referendum's approval or some other forms of new revenue, the state health officer said he fears "it will become progressively more difficult to provide services that the people have come to expect."

But it is not just the agencies funded by the General Fund that could be impacted. If the referendum fails, there is certain to be pressures to divert funds from the state education budget to the General Fund. Gov. Robert Bentley already has proposed such a diversion.

Legislative leaders have committed to replacing the money taken from the Alabama Trust Fund. To ensure that happens, Sen.

Bryan Taylor, R-Prattville, has said he would introduce legislation to require that the state replace the money removed from the Trust Fund within 10 years.

House Speaker Hubbard said Thursday that he expects Rep. Jay Love, R-Montgomery, to introduce similar legislation in the House and that there is strong support to pass it.

Hubbard said the Legislature already has begun a process to address the General Fund shortfall over the long-term, including such steps as transferring some revenue streams that are likely to grow so the money will flow to the General Fund. That includes 25 percent of the state's use tax and 75 percent of the Internet sales tax.

In addition, Hubbard said the legislative leadership is looking at other cost-saving measures, such as early retirement incentives for veteran state employees.

But it will take time for those changes to begin to have an effect.

"We are asking the voters to allow us to use the rainy day fund to keep our heads above water until then," Hubbard said. "It's not the best solution, but it's the best available to us now."

We are pleased to announce the addition of Ken Hare to our news team. Ken is no stranger to central Alabama as he served the last 28 years as the Editorial page editor of the Montgomery Advertiser. HeMore >>

We are pleased to announce the addition of Ken Hare to our news team. Ken is no stranger to central Alabama as he served the last 28 years as the Editorial page editor of the Montgomery Advertiser. HeMore >>

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